WRAPUP 1-Tesla formalizes Toyota deal, to deliver 2 cars

* Toyota-Tesla MoU signed on Thursday

* Tesla to deliver two electric car prototypes by month-end

* Toyota open to other partnerships like Tesla deal

* Toyota may experiment with Tesla battery approach

By Poornima Gupta and Kevin Krolicki

SAN FRANCISCO/NAGOYA, Japan, July 9 (BestGrowthStock) – Electric
carmaker Tesla Motors Inc (TSLA.O: ) said on Friday it signed a
memorandum of understanding with Japanese automaker Toyota
Motor Corp (7203.T: ) to deliver two electric vehicles to the
world’s largest automaker by the end of month.

“Since our announcement in May, Toyota and Tesla
engineering teams have made a lot of progress in a short amount
of time and it is exciting to start seeing some initial
results,” Tesla Chief Technology Officer JB Straubel said in a
statement.

“The prototypes will combine Toyota vehicles with Tesla
electric powertrains.”

Tesla had announced the partnership to develop electric
vehicles with Toyota in May, but revealed in a regulatory
filing that it had no formal deal in place with the Japanese
automaker.

The MoU was signed on Thursday, a Tesla spokesman said, but
declined to reveal which Toyota vehicles the company was
working on.

Earlier on Friday, Toyota President Akio Toyoda told
reporters in Japan that Toyota was interested in experimenting
with Tesla’s approach to using lithium-ion battery cells
developed for the electronics industry as a potential
alternative to developing batteries tailor-made for its own
vehicles.

“We’ll see which better meets the needs of consumers. We’re
taking a multi-faceted approach,” Toyoda told a group of U.S.
reporters invited to tour Toyota’s facilities this week.

Engineering teams from the two automakers have been meeting
and working on the prototypes, Tesla said.

The comments represent the most detail the two companies
have provided about the scope of a still-developing partnership
with Tesla announced in May by Toyoda and Tesla Chief Executive
Elon Musk.

Meanwhile, Toyota is also continuing work on a
battery-powered small car the Japanese automaker plans to
launch in 2012, senior executives said on Friday.

$50 MILLION INVESTMENT

Toyota invested $50 million in Tesla in a private placement
after the electric vehicle maker’s initial public offering in
June. After zooming 40 percent on their first day of trading on
June 29, Tesla shares have come back to earth and are trading
around their initial public offering price of $17.

Toyota Executive Vice President Shinichi Sasaki said the
world’s largest automaker was open to other partnerships like
its Tesla deal as it believes a number of alternatives to
traditional gas engines could find a market in the next few
years.

“It’s hard for a single company to take on environmental
technology all alone because of the need for infrastructure. I
think cooperation is going to be increasingly important,”
Sasaki said.

Toyota’s tie-up with Tesla was seen as a strong endorsement
of the seven-year-old start-up and credited with driving
investor interest in the company best known for its $109,000
electric Roadster.

Musk has said Toyota would be a customer for Tesla, which
also has a deal to supply battery packs to an electric version
of the Smart mini-car for Germany’s Daimler AG (DAIGn.DE: ).

But in the absence of a contract, it had been less certain
what Toyota aimed to gain from the tie-up, which was negotiated
in about a month after Toyoda met Musk for the first time in
Los Angeles.

Toyota will assemble a team of engineers from its U.S.
research and manufacturing arm to work with Tesla on the joint
prototype the companies will develop, a Toyota spokesman said.

The Roadster is powered by more than 6,800 laptop battery
cells and can accelerate to 60 miles per hour from a standing
stop in less than 4 seconds, faster than all but a handful of
luxury sports cars.

Toyoda said he was impressed by the car and by Tesla’s
start-up culture, which he said he hoped would contribute to
his effort to revitalize Toyota after a safety crisis earlier
this year marked by the recall of about 8 million vehicles.

TESLA’S APPROACH “SHOCKING”

Sasaki said he considered Tesla’s approach to using
off-the-shelf battery components “shocking,” but suggested that
it could open the door to lower costs for Toyota if the Tesla
battery system holds up to quality standards.

“At Toyota we have a lot to learn from this partnership.
We’ve just begun working with Tesla but I believe that we’ve
taken an important first step,” Sasaki said.

A team of Toyota engineers is continuing to work on a
small, urban car powered by batteries for launch in 2012,
company officials said. Toyota showed off a prototype of that
car based on its IQ mini-car in 2009.

Toyota dominates the market for traditional hybrids with
its Prius and had been less enthusiastic about the size of the
developing market for pure electric cars than rivals led by
Nissan Motor Co (7201.T: ).

Separately, Toyoda said the automaker had taken the first
steps toward winning back consumer trust in the wake of its
recent safety crisis.

The automaker has slowed product development, dispatched
more engineers to work on safety issues and given its U.S.
management team a stronger voice in making the determination on
whether to recall a vehicle.

U.S. safety regulators said Toyota was too slow to react to
safety problems and the recalls hurt Toyota’s sales and damaged
its reputation for quality.

“We are listening hard to what our customers have to say
and we are working hard to earn their continuing trust,” Toyoda
said.
(Additional reporting by Chang Ran Kim in Tokyo; Editing by
Matthew Lewis)

WRAPUP 1-Tesla formalizes Toyota deal, to deliver 2 cars